How companies can enjoy the hidden benefits of automation

Companies may be embracing automation for regulatory reasons, but they are also enjoying unexpected benefits, according to Perttu Nihti, chief product officer at software provider Basware.

“The wealth of data collected by accounts payable automation provides some great insights for businesses,” he said. “It can give them really good visibility and improve their decision-making.”

Nihti believes it help firms become more efficient, monitor outstanding liabilities with more clarity, analyse purchase orders, have better control over cash flow, and reduce the risk of late payments.

“There are also benefits that aren’t obvious, such as enhanced relationships with suppliers,” he added. “By automating processes, you can ensure strategic suppliers get paid on time.”

In fact, automating the process may even enable firms to settle outstanding invoices quicker than anticipated and enable them to benefit from early payment discounts.

“This is a practical way of saving money,” added Nihti. “Having good analytics on top of the data enables you to look at what has actually been bought and sold – and for what prices.” 

Regulatory requirements

Of course, the main reason for embracing accounts payable (AP) automation is to ensure the business complies with the ever-changing global regulatory environment.

Governments around the world have been introducing more stringent invoicing mandates as part of their attempts to tackle fraud and ensure taxes get paid.

“It’s really important that AP teams have the right partners in this space to keep on top of all the upcoming regulatory changes and have the right solutions,” said Nihti.

Unfortunately, full compliance can often be difficult to achieve when accounts payable processes are carried out manually as there is always the risk of human error.

The situation has been exacerbated since Covid-19 as large-scale remote working has provided even greater challenges for accounts payable teams trying to remain compliant.

If they fail, this can spell trouble with the regulators. “It really varies by jurisdiction, but the implications of not being compliant could be pretty substantial fines,” warned Nihti. 

Problems and solutions

Of course, regulation isn’t the only threat for businesses. Failing to have efficient processes in place could mean your suppliers invoices aren’t even getting into the system.

“If they aren’t getting paid, then this could start to have some real, direct, tangible implications when it comes to running the business,” explained Nihti.

Traditional manual processes are also slow and cumbersome, with complicated approval systems, lack of visibility, and the potential for invoices to be duplicated or get lost.

Advanced automation, however, means less human intervention, more efficient processes in place, and far greater control being exercised by finance teams.

Understanding the extent of liabilities is a prime example, according to Nihti.

“It’s about knowing how much you have in terms of outstanding purchase orders and invoices that haven’t yet been paid,” he explained. “It also gives them much better control over cash flow.”

As well as making everything more efficient, AP automation cuts the cost of staffing and invoice processing, as well as increasing on-time payment performance.

More recent additions to automated solutions, meanwhile, include the ability to process recurring spending, pointed out Nihti. He believes this is particularly useful.

“These are regular invoices that aren’t backed by purchase orders,” he explained. “Today, systems can automatically detect recurring invoices and ask if you’d like to set some order approvals.”

Worth the investment

Even reluctant chief executives are likely to be persuaded that an automated accounts payable system will be more than worth the initial outlay.

It is why AP automation has become an increasingly competitive area over the last few years, with rival providers offering solutions to prospective clients.

For example, Basware’s artificial intelligence and machine learning functionality is available at every point in the process – from invoice receipt and routing to automated matching and coding.

That’s why it’s crucial to make sure everyone understands what’s on offer and how they can help their businesses, according to Basware’s Nihti.

“You need to see if they really can automate the process and not just push the work to suppliers or your business users,” he said.

Looking ahead, Nihti anticipates AP automation will remain an important area and develop further in line with the rise in artificial intelligence.

“I think there’s going to be very strong demand for high automation rates and a lot of opportunities for companies to become more efficient,” he said.

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